Question

Because the marketplace already contains several successful nutrition bars, you need to develop an effective marketing strategy. In particular, you need to determine the effect that price and various in-store promotions have on the sales of OmniPower. Before marketing the bar nationwide, you conduct a test-market study of OmniPower sales, using a sample of 34 stores in a national supermarket chain. You employ a number of different strategies across the stores, based on recommendations by a consultant, In-Store Placements Group. For example, the promotional budget is varied across the stores. Some stores spend $200 per month, others spend $400 per month, and still others spend $600 per month. In some stores, the products were placed on the endcap in the produce section. Other stores, placed the product on the endcap in the beverage section. In addition, some stores had coupon dispensers, while others did not. You hope that you can analyze the sales in these stores to understand which strategy seems to be the most effective.

In-Store Placements Group’s vice-president, Claire Deborahs has written you a letter touting a number of findings, based on her analysis of the test market data. You are charged with looking at the data to understand whether Ms. Deborah’s inferences are justified. Do a complete analysis using the tools you have learned in this class. Develop a deep understanding of the relationships present in the data. Develop a report for your company based on your findings. In addition, your president, Rosa Rodriguez wants you to write her a short brief describing your findings. It should include a discussion of the findings that Ms. Deborah highlighted in her letter and whether they are accurate. She will be meeting with Ms. Deborahs next week and wants to be prepared.

From the Desk of

Claire Deborahs, Vice President, Customer Relations

To my friends at OmniFoods Marketing:

As you know, in reviewing your test marketing of OmniPower bars, my colleagues and I at ISPG suggested how your sales could be enhanced. From our experience marketing similar products, we told you that the shelf locations of a product and the presence of in-store coupon dispensers can enhance supermarket sales.

We are happy to report the positive correlation of these factors and sales of OmniPower bars. You can see the effects, if you look through the data. I think the most striking thing is the only store with over 4000 unit sales and only 200 in promotional dollars was a store with coupon dispensers!

We can talk at a later time about extending our marketing agreement. In the meantime, congratulations on a successful test marketing venture.

Sincerely,

Claire Deborahs

Bars	Price	Promotion	End-Cap	Dispensers
4141	59	200	Produce	Yes
3842	59	200	Produce	Yes
3056	59	200	Beverage	No
3519	59	200	Beverage	Yes
4226	59	400	Produce	No
4630	59	400	Beverage	Yes
3507	59	400	Beverage	Yes
3754	59	400	Produce	Yes
5000	59	600	Produce	No
5120	59	600	Produce	No
4011	59	600	Beverage	Yes
5015	59	600	Beverage	No
1916	79	200	Beverage	No
675	79	200	Beverage	No
3636	79	200	Produce	No
3224	79	200	Produce	Yes
2295	79	400	Beverage	No
2730	79	400	Beverage	Yes
2618	79	400	Beverage	No
4421	79	400	Produce	Yes
4113	79	600	Produce	Yes
3746	79	600	Beverage	No
3532	79	600	Beverage	No
3825	79	600	Beverage	No
1096	99	200	Beverage	Yes
761	99	200	Beverage	Yes
2088	99	200	Produce	Yes
820	99	200	Beverage	Yes
2114	99	400	Produce	Yes
1882	99	400	Beverage	No
2159	99	400	Produce	No
1602	99	400	Beverage	Yes
3354	99	600	Produce	No
2927	99	600	Produce	No

Answer 1

The regression output is:

	R²	0.868
	Adjusted R²	0.850
	R	0.932
	Std. Error	487.184
	n	34
	k	4
	Dep. Var.	Bars
ANOVA table
Source	SS	df	MS	F	p-value
Regression	4,52,10,568.1501	4	1,13,02,642.0375	47.62	2.44E-12
Residual	68,83,109.2911	29	2,37,348.5962
Total	5,20,93,677.4412	33
Regression output					confidence interval
variables	coefficients	std. error	t (df=29)	p-value	95% lower	95% upper
Intercept	5,432.8719
Price	-53.0447	5.2357	-10.131	4.91E-11	-63.7530	-42.3364
Promotion	3.5650	0.5652	6.307	6.88E-07	2.4090	4.7210
End-Cap	815.3759	169.3097	4.816	4.23E-05	469.0987	1,161.6531
Dispensers	100.3259	180.4650	0.556	.5825	-268.7665	469.4183

The regression equation is:

Bars = 5,432.8719 -53.0447*Price + 3.5650*Promotion + 815.3759*End-Cap + 100.3259*Dispensers

86.8% of the variation in Bars is explained.

When the coupon dispensers are there and the end-cap is produced, the bars will see the maximum profit.

There is a strong positive relationship between the variables.